An Analysis of Agricultural Sector Funding By County Governments

Kenya transitioned to the devolved system of governance with the county governments taking office in March2013. The county governments have been allocated significant responsibilities in the agricultural sector. Weanalysed the first year county government budgets (2013/14) focusing on the funding for the agriculturalsector. We find that although the county governments have allocated a considerable proportion of theirexpenditure to development, the share allocated to the agricultural sector is low, ranging from 0 to 24 per cent.This puts at risk ongoing programs in the sector and may potentially slow down the growth momentum experienced in the sector. We recommend increasing allocation under the revised budgets and prioritization ofthe agricultural sector in the county government medium term plans.

An Analysis of Agricultural Sector Funding By County Governments.pdf

Created on 27 July 2015

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Relating Food Expenditure to Food Insecurity in Urban Households: The Case of Nairobi

Author(s): Mercy Kamau, J. Olwande and J. GithukuIntroduction

The aim of this brief is to explain how food-insecure households in Nairobi adjust their food expenditures and food budget as hunger deepens. The research assessed the relationship between food security and household expenditure on food.

Relating Food Expenditure to Food Insecurity in Urban Households: The Case of Nairobi

Created on 27 July 2015

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Can the Market Deliver? Lessons from Kenya's Rising use of Fertilizer following Liberalization

Author(s): Ariga,Joshua; Jayne,Thomas

Introduction

Fertilizer use has increased dramatically in Kenya since the fertilizer market was liberalized in the early 1990s. Kenya is the only country in Sub-Saharan Africa that has achieved at least 30% growth in fertilizer use per cropped hectare over the past decade and which already started from a relatively high base (25kgs per hectare or more by the early 1990s, Table 1).

Using national consumption figures, prior research has been unable to show whether small farmers or large farms and estates are driving this growth, whether the increased fertilizer consumption is being devoted to smallholder food crops or mainly industrial crops such as tea and sugarcane, or whether the growth in fertilizer use is attributable to any particular type of fertilizer delivery supply chains. Our study sheds light on these three issues.

Can the Market Deliver ? Lessons from Kenya's Rising use of Fertilizer following Liberalization

Trade and Agricultural Competitiveness: A Case of Wheat and Rice Production in Kenya

The competitiveness of Kenya’s production systems compared to those of our trading partners’ remains a critical issue with regards to both economic development and food security. Self-sufficiency in major staples has remained elusive as Kenya continues to face structural deficits in both wheat and rice. The deficit is met through imports. Despite Kenya being a high cost producer of wheat and rice there are groups of farmers that are producing these crops competitively. Thus there is potential for growth of the wheat and rice sub-sector through replicating the success cases of competitive farmers and also addressing the inefficiencies that lies along the value chain. The inefficiencies identified in this research included low yields, high input costs, high operational costs, and poor infrastructure. To address these inefficiencies in the short run there is need to harmonize taxation across municipalities, reducing double taxation especially where commodities transcends municipal boundaries. Zero rating of agricultural machinery and removal of VAT on spare parts is recommended. Streamlining the importation, refinery and distribution of fuel to avoid the lag that creates artificial shortages is advised. Bulk importation of inputs would facilitate economies of scale. In the long-run, there is need to focus government expenditure on public investments such as improvement and rehabilitation of infrastructure (rail, road, ports markets and irrigation), alternative energy sources (wind,solar, nuclear) and increasing productivity (breeding high yielding seed, promoting variety turnover, extension services).

Trade and Agricultural Competitiveness: A Case of Wheat and Rice Production in Kenya

Governments throughout the developing world have a keen interest in diversifying their rural economies. One basis for this desire - concern that reliance on a few crops for cash income can lead to instability in income that threatens rural livelihoods – has undoubtedly been accentuated by the worldwide price crises of 2007-08 and 2010-11. It is also true that, for many households that produce primarily for their own consumption, diversifying by adding cash crops (e.g., cotton, tea, coffee, fresh produce) while continuing to produce for their own consumption can lead to greater incomes; diversification into offfarm activities can also greatly increase (and stabilize) total household incomes. Thus, from the perspective of managing risk and associated vulnerability of rural households, and in some cases from a desire to increase incomes, farm diversification makes sense as a policy goal.

Yet to achieve rapid growth in rural areas and the economy as a whole, it is widely recognized that countries must go through an agricultural transformation, which involves more specialization by rural households, not more diversification. Resolving this tension between the clear benefits to rural households in the short- and medium-term from diversification with the long-term need for greater specialization and trade is a major policy challenge for African governments.

This Policy Synthesis addresses this challenge in four ways1. First, it refines the understanding of diversification by identifying and quantifying different types of diversification at the level of the rural household, and by showing that diversification proceeds very differently at this level compared to the broader agricultural sector and the macroeconomy. Second, it links these levels of diversification (farm, agricultural sector, macro economy) to the process of agricultural transformation. Third, it empirically examines diversification trends in rural areas of Kenya from 1997 to 2007 and uses this analysis to make inferences regarding the progress of agricultural transformation in the country. Finally, it draws conclusions regarding the policy and programmatic initiatives most appropriate for Kenya at this specific point in the country’s development.

Market Participation among Poor Rural Households in Kenya

Author(s): John Olwande and Mary MathengeIntroduction

Kenya's smallholder agriculture remains a major engine of rural growth and livelihood improvement, yet it is largely semi-subsistence. Therefore, any pathway that can lift large numbers of the rural poor out of poverty will require some form of transformation of smallholder agriculture into a more commercialized production system. Unfortunately, the many poor smallholder farmers are constrained by several factors in their quest to be more commercial oriented in farming. To promote market oriented production by poor smallholder farmers, policy actions are needed to help them expand their production through improving productivity and access to land. Input subsidy programs targeting poor smallholders is one way in which productivity can be improved. Actions to address challenges along the valuechains for agricultural commodities also need to be emphasized. Promotion of collective action among poor smallholder farmers would be one area in which investments need to be channelled.

Prevalence and Depth of Hunger in Poor Households Nairobi and Adequacy of Cash Transferred

Author(s): Mercy Kamau, J. Olwande and J. Githuku Introduction

The aims of this brief are two-fold. We begin by drawing attention to food insecurity in urban areas by using empirical evidence on food insecurity among households in Nairobi. Secondly, we assess whether the cash transferred to food insecure households was adequate to reduce hunger. Guiding questions were: i. By how much would households need to be subsidized in order to meet shortfall in dietary energy intake? How much more maize grain or maize meal needs to be consumed to meet the shortfall in energy intake? What is the cost of achieving this? ii. How does the estimated cost of supplementing household’s dietary energy intake compare with the cash transferred to poor and vulnerable households in Nairobi? iii. Which is the cheaper option for meeting dietary energy deficit: maize grain or maize meal?

Prevalence and Depth of Hunger in Poor Households Nairobi and Adequacy of Cash Transferred

Created on 27 July 2015

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Productivity trends and performance of dairy farming in Kenya

Author(s): Stella Wambugu, Lilian Kirimi and Joseph OpiyoIntroduction

Kenya’s dairy industry is dynamic and plays an important economic and nutrition role in the lives of many people ranging from farmers to milk hawkers, processors, and consumers. Kenya has one of the largest dairy industries in sub-Saharan Africa. Though the last livestock census was conducted in 1966, the current official cattle population statistics come from the Ministry of Livestock and Development, through its field reports compiled by extension officials. The official statistics place the number of milking cattle at 3.8 million (Government of Kenya, 2008).

A survey conducted by Smallholder Dairy Project (SDP) asserts that there are approximately 6.7 million dairy cattle in Kenya (SDP, 2005). The Food Agricultural Organization (FAO) on the other hand estimates a figure of 5.5 million milking animals (TechnoServe, 2008). In Africa, Kenya is the only country, after South Africa that produces enough milk for both domestic consumption and export.

Sudan on the other hand is the largest producer of milk in the Common Market for Eastern and Southern Africa (COMESA), but it does not produce enough to satisfy both domestic and export markets. The dairy industry is the single largest agricultural sub-sector in Kenya, larger even than tea (Muriuki et al. 2004). It contributes 14 percent of agricultural GDP and 3.5 percent of total GDP (Government of Kenya, 2008).

The industry has grown tremendously since its liberalization in 1992. Liberalization led to a rapid growth of the informal milk trade that mainly consists of small-scale operators dealing in marketing of raw milk. At that time, there was an emergence of new institutional arrangements in milk collection, processing and marketing, which included hawkers, brokers, self-help groups, neighbours and business establishments like hotels (Karanja, 2003). The informal milk market controls an estimated 70 percent of the total milk marketed in Kenya (KDB 2009; Government of Kenya 2006). This sector is important and is driven by among other factors the traditional preferences for fresh raw milk and its relatively lower cost.

Raw milk markets offer both higher prices to producers and lower prices to consumers but with several challenges relating to quality control and standards, and the associated health and safety concerns. The informal milk market has in the past faced several challenges. This was because prior to policy change in 2004, informal vendors, including mobile milk traders and bar vendors, and milk transporters, were not officially recognised under the old dairy policy.

As a result, they were frequently harassed as powerful dairy market players sought to protect their interests and increase market share. There were also concerns over food safety and quality of milk sold by the informal sector players. The dairy policy at the time focused on promoting value addition and increasing the market share of pasteurized milk while attempting to address potential public health risks of consuming raw milk.

However, since 2004, there has been a major change in policy and practice towards the informal milk market (Leksmono, C.et al 2006). The Dairy Policy now clearly acknowledges the role of small scale milk vendors (SSMVs) and contains specific measures to support them. These include: development of low-cost appropriate technologies, training on safe milk handling, provision of incentives for improved milk collection and handling systems, and establishment of a supportive certification system.

While the Dairy Policy is still in progress, awaiting approval by parliament, there has been a proactive engagement by the Kenya Dairy Board in training and certification of SSMVs, in order to safeguard public health and assure quality of the raw milk (Leksmono, C. et al 2006). This study examined the Kenya dairy sector through a synopsis of the trends in milk productivity over time, and the performance of the dairy enterprises at the farm level.

Using both crosssectional (2010) and panel data (2000-2010) collected from small scale farms in selected districts in Kenya. Findings from the study were presented using descriptive statistics and gross margin analysis of the dairy enterprise. The gross margin analysis sought to establish the economic viability of smallholder dairy production units. The specific objectives of the study were to examine milk productivity trends; assess variable costs of production and gross margin at the farm level for different grazing systems; highlight the constraints in the dairy industry; and, outline policy implications in relation to the socio-economic issues in milk production and marketing.

Section 2 of the paper provides a brief review of literature on the Kenyan dairy sector. Section 3 describes data and methods, while results are discussed in section 4. Summary and conclusions are presented in section 5, and policy recommendations are outlined in section 6.